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Spring 2009 Public Policy Update

President’s Budget Limits Charitable Deduction for the Wealthy


President Obama’s recently released budget would limit the value of the tax break for itemized deductions, including donations to charity, to 28 percent for families making more than $250,000.

According to government estimates, the plan would cost wealthier taxpayers about $318 billion in new taxes over 10 years, reports The Wall Street Journal.

But in a statement before Congress, Treasury Secretary Timothy Geithner suggested that the administration may be willing to consider dropping or modifying the proposal, the newspaper reports.

When asked by Sen. Max Baucus (D., Mont.), at a Congressional hearing March 4, why Obama’s budget blueprint would involve paying for expanded health coverage with a deductions curb that "has nothing to do with healthcare,” Geitner said the following: "We recognize there are other ways to do this …We are willing to listen to all ideas that meet these broad principles."

Action Required:

AFP is encouraging its members to contact their Senators and Representatives in Congress to oppose this or any other provision that would impose new limits on charitable deductions.

For draft talking points and letters, please go to this link on the AFP website.


In a joint statement, AFP and the Association for Healthcare Philanthropy (AHP) opposed the proposal in the president's budget that would impose new limits on charitable tax deductions.

In addition, AFP, along with a coalition composed of the American Society of Association Executives, the Alliance of Nonprofit Mailers, DMA Nonprofit Federation and the National Catholic Development Conference, sent letters to key members of Congress opposing this proposal.

Were this proposal to become law, it would have a substantial negative impact on charitable giving.  Indiana University's Center on Philanthropy recently estimated that the budget proposal to limit deductions and raise rates, if applied in 2006, would have reduced giving by nearly $4 billion


Congress Removes Language Barring Prior Patient Solicitation from Stimulus Package


In negotiations on the economic stimulus package (the American Recovery and Reinvestment Act of 2009) Congress replaced a problematic nonprofit hospital provision that barred healthcare organizations from contacting prior patients with new language that gives patients an “opt-out” from solicitations. The bill was then signed into law in February.

Action Required:

None at this time.


AFP thanks those who took the time to write and call your members of Congress to urge them to remove the provision that barred nonprofit hospitals and other health care organizations from contacting prior patients for philanthropic purposes. AFP also appreciates the Association of Healthcare Philanthropy’s efforts on this issue.

Section 4406(b) of the House-passed version of the American Recovery and Reinvestment Act would have prevented hospital foundations from contacting prior patients for philanthropic purposes (as is currently allowed) through an amendment to the Health Insurance Portability and Accountability Act (HIPAA).  The Senate-version of the bill did not contain that provision—the Senate removed it after receiving feedback from AFP, AHP and several other organizations.


AFP’s IRA Rollover Fact Sheet

You will find AFP’s IRA Rollover provision fact sheet that provides background information and answers to frequently asked questions at this link.

With the IRA Rollover set to expire at the end of this year, AFP will work with Congress to ensure that the provision is extended before it expires.


IRA Mandatory Minimum Distribution Rule Waived for 2009


On December 23, 2008, President Bush signed into law the Worker, Retiree and Employer Recovery Act of 2008 (H.R. 7327). This legislation included a waiver of the mandatory minimum IRA distribution rule (just for the 2009 calendar year) for individuals who are 70½ and older. 

Under current law, people who are 70½ and older are required to distribute a certain amount of funds from their IRA to avoid a stiff tax penalty. But through this recently enacted law, individuals who are 70½ and older can keep all of their funds in their IRA without receiving a tax penalty.

Action Required:



What is the potential impact on the IRA Rollover Provision?
The temporary waiver of the mandatory minimum distribution rule could detrimentally affect donations under the IRA Rollover provision that allows individuals who are 70½ and older to contribute up to $100,000 from their IRAs as direct gift to a charity tax-free.  The IRA Rollover provision currently is in effect until the end of 2009. 

Part of the rationale for enacting the IRA Rollover provision was that individuals could direct their mandatory minimum distributions to charities to diminish the tax implications of those distributions (mandatory minimum distributions from IRAs are treated as taxable income unless they are contributed to charity). However, because individuals 70½ and older will not be required to distribute funds from their IRAs in 2009, charities could see a reduction in IRA gifts.


Canada Revenue Agency Delays Publication of Its Fundraising Guidelines


As has been reported previously, the Canada Revenue Agency (CRA) has been finalizing its fundraising guidelines.  Those guidelines were expected to be published in January 2009.  However, the CRA has delayed their publication to sometime in March.

Action Required:



Throughout 2008, informal consultations were held between representatives of the Canada Revenue Agency (CRA) and AFP, Imagine Canada and the Health Charities Coalition of Canada to discuss the points in the group’s August submission (that was endorsed by over 85 organizations) to the CRA. The proposed fundraising ratio grid and other issues were discussed at length.  CRA also received feedback from other nonprofit sector organizations.

The CRA posted this update on their website in December 2008.


Canada’s Cabinet Rejects AFP-Imagine Canada Joint Petition Regarding Telemarketing Rules


Canada’s federal cabinet has rejected a joint petition filed by AFP and Imagine Canada that would have exempted charities from red tape and fees associated with the new National Do Not Call List.

The decision does not provide any reasons but simply states that the Governor-in-Council declines to rescind, vary or send back the decision of the Canadian Radio-television and Telecommunications Commission (CRTC).

Action Required:

None at this time.  However, there may be a call for grassroots action in the near future.


With this issue now determined, there are three important actions that charities in Canada are required to undertake under the Do Not Call List regime.

(The following is not intended to be legal or other professional advice and should be considered as information only. Please review the statutory provisions in detail and ensure that your board is aware of the new provisions and the obligations of your organization under the act.)

1.  Register with the National Do Not Call List operator: Charities that carry out telemarketing activities as defined in the Telecommunications Act are required to register with the National Do Not Call List (DNCL) Operator. Charities are “exempt organizations” under the national regime. This means that Canadians who wish to prohibit telemarketing calls from charities must contact those charities directly and cannot do so through the public list operator. 

Nevertheless, the CRTC has provided that exempt organizations that engage in telemarketing, including charities, must register with the national DNCL operator. The public policy rationale is that the DNCL operator wants to include in its registry all organizations that carry out telemarketing activities, including exempt organizations (AFP believes this rationale is neither clear nor effective, and this was one of the objections raised in the petition). The obligation to register with the operator took effect in September 2008. The failure to register can expose organizations, whether exempt or otherwise, to fines and penalties.

2.  Pay fees to the National Do Not Call List investigator: The national regime provides for both an operator and an investigator. The investigative body must be distinct from the operator. At present, the CRTC has decided to administer the role of investigator, rather than engaging a third party, and has waived these fees while it is doing so. Therefore, there are no fees to be paid at this time but fees may be implemented in the near future. Presumably, the CRTC will provide notice to all registrants when fees are implemented. Charities and all other exempt organizations must, therefore, both register with the DNCL operator as set out it item 1 above and must pay fees to the Investigative body once these fees come into effect.  

3.  Establish and maintain a private do not call list:  While charities are exempt organizations for the purpose of the national list, the Act requires that they maintain private do not call lists. In particular, Canadians are entitled to call specific charities and require the charity to add the caller to the charity’s own do not call list. The charity must maintain and comply with its list or is subject to investigation and penalties under the act.

To review the DNCL statutory  provisions, go to “Unsolicited Communications”-Sections 41.2 -41.7 under Part III of the  of the Telecommunications Act found here.

The CRTC also posts information on the DNCL on its site, including to the above link, at

AFP thanks the more than 30 organizations who filed letters of support for the petition and especially thanks Imagine Canada, who collaborated on the preparation and filing of the petition. 

For background on the CRTC changes and AFP’s advocacy efforts in this area, please click here.


AFP Works with Coalition to Educate Parliament on Current Giving Challenges, Proposals  


AFP and members of Canada’s charitable community posted advertisements in newspapers around the country about the current economic challenges affecting giving and nonprofit organizations.

Action Required:



The messages, addressed to key members of Parliament, urged the federal government to support three specific proposals:

1.   Exempt gifts of private company shares from capital gains taxes

2.   Exempt gifts of real estate from capital gains taxes

3.   Level the playing field between “arms length” and “non-arms length” employees who exercise stock options and give the shares to a charity within 30 days

AFP and other participating organizations supported running these ads in order to raise public awareness of these proposals and the benefits to Canada’s nonprofit sector.
The ads were signed by the heads of leading national umbrella organizations representing the nonprofit sector, as well as the leaders of prominent hospitals, universities, social service agencies and arts and cultural organizations. Amanda Gellman, chair of AFP's Canadian Government Relations Committee, signed the messages on behalf of AFP Canadian members.

A full-page advertisement appeared in the Jan. 5 editions of The Globe and Mail and National Post. Similar ads ran in other newspapers across Canada, including the Sunday (Jan. 11) Toronto Star, the Winnipeg Free Press, Calgary Herald, Ottawa Citizen and Montreal Gazette.

AFP wishes to thank businessman and philanthropist Donald K. Johnson for leading this initiative and to all those who collaborated on and supported this strong message to our federal leaders.

A copy of The Globe and Mail advertisement is available at this link.


National Philanthropy Day Legislation Re-Introduced


On January 26, 2009, Sen. Jerahmiel S. Grafstein (Liberal, Metro Toronto) reintroduced legislation (S-217) that would create the first permanent government-recognized National Philanthropy Day® (NPD) in the world. 

Action Required:

None at this time.  AFP will start a new campaign to encourage passage of the bill this year and will contact members for their assistance in the near future.


Last year, the Senate passed the previous version of the bill and the House of Commons was poised to pass it as well.  Unfortunately, the House was unable to take action prior to the election, and the bill died. 

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